Guesthouses are enjoying a moment, even if they're rarely being used to house actual guests

Allison and Craig Knizekstruggled for 10 years over how to expand their 2,650-square-foot home in Sherman Oaks, Calif. Then they found the solution: Rather than increase the footprint of their existing home, they decided to build another one.

The Knizeks finished construction last year. Built for $300,000, their 789-square-foot guesthouse has an A-frame structure with an 18-foot ceiling in the living room and bi-fold doors that open onto a fire pit and a pool. This guesthouse isn't just for guests, though: The couple...